The successes and missed opportunities of American Rescue Plan Act (ARPA) funds

The Covid-19 pandemic was a profoundly uneven tragedy. Low-income communities of color suffered from sharply higher rates of infection, hospitalization, and death compared with White and higher-income populations.

The American Rescue Plan Act (ARPA) took direct aim at these disparities. Enacted in 2021 as a nearly $2 trillion stimulus and recovery package, it carved out $130 billion to local governments nationwide, with equity as a central principle. Cities and counties were encouraged not only to address the immediate effects of the pandemic, but also to tackle the deeper health, economic, and structural inequities that were laid bare. The funding created a once-in-a-lifetime opportunity to support and strengthen marginalized and under-funded communities.

How much progress was made toward these goals? Our Budget Equity Project has spent the past three years examining exactly that: tracking how local governments deployed ARPA funds to advance racial and economic equity. Our most recent research zeroes in on Washington state, where we looked at more than a dozen cities and counties, many of them outside the state’s major urban corridors and therefore outside the field of vision of most philanthropists.

In a conversation edited for clarity and brevity, policy analyst Ashley Thomas reflects on the successes and limitations of ARPA investments in Washington state, and what they reveal about the broader national picture. With ARPA funding now sunsetting and the Trump administration dismantling much of the federal infrastructure that supported equity initiatives, she also considers the legacy of this historic piece of legislation.

What did ARPA funds mean for local communities?

ARPA was a huge deal. The funds were truly unprecedented in their scale and equity mandate. For the first time ever, the U.S. Treasury had language for very specific directives about redressing systemic inequities. Looking back today, after everything regarding equity has been erased, it’s difficult to imagine the federal government really did this. Washington state, as one example, got $7 billion, and 14 of its cities and counties received a total of $1.2 billion.

Who decided how the money was spent?

Local governments were given pretty wide latitude on how they allocated funds. There was guidance about channeling these funds toward the most impacted communities, which the federal government defined as communities of color and low-income communities. The guidelines also encouraged community engagement in guiding decisions about allocation — not a requirement but a super strong suggestion.

The amount of transparency the federal government required was also pretty unprecedented. The 2009 American Reinvestment and Recovery Act (ARRA) did not require the amount of reporting that ARPA did: quarterly expenditure reports and annual performance reports outlining progress on equity goals and outcomes.

Did reporting on spend and performance become overly onerous for local governments?

There were two sides to that coin. One is positive: public transparency for government action. The flipside is that some small jurisdictions were handling this huge federal grant for the very first time, and didn’t have the staff to do it. Places like Chicago, New York City, Seattle, and many California cities have been doing equity work for a long time. They produced highly detailed and designed multi-page performance reports. Then there are places like Yakima County, Washington, which simply sent in a one-page executive summary.

Community organizations often played a key role in shaping how ARPA investments were spent. What are some examples?

The small town of Mabton in Yakima County (population 1,959, per the 2020 census) is in a multi-year water crisis, with dirty and murky water. When ARPA dollars came to Mabton, the mayor wanted to use $200,000 to build a recreational splash pad. The local Chicana/Latina-led organization ELLA heard about the plan, and  the project became a catalyst for director Maria Fernandez. She started showing up to every city council meeting to talk about her neighbors’ water quality concerns for their children and all the children in Mabton. She decided: We’re no longer staying quiet. We’re stating what we need, why we need it, and we’re demanding answers when local governments fail to act. As a result, ELLA was able to redirect those ARPA funds to a water treatment study and critical infrastructure in the form of a water tank mixer.

We all got this taste of what’s possible when we invest in social good. Then it just stopped.

Spokane is another example. The original design of its ARPA grant application process was complicated and inaccessible for smaller and BIPOC-led organizations. So, with support from the Waters Meet Foundation, 16 BIPOC-led organizations formed a coalition that met every two weeks with Spokane city employees to help improve the process and make it more accessible. To its credit, the city listened with humility. The result was a more inclusive grant application process and support for organizations applying for ARPA funds. A majority of coalition members received ARPA dollars.

One Spokane community organizer described the impact of ARPA funding as “two steps forward, one step back.” What does that mean?

ARPA funded an entire rental assistance program — a huge, tangible way to support people — for the Pacific Islander Community Association of WA (PICA-WA). That was a step forward in funding housing security. ARPA also sparked a political awakening for local groups, helping transform them into a significant lobbying force. Maria at ELLA was a seasoned organizer before the pandemic. With ARPA, she received a valuable education on dense details like tax policy and how to speak the municipal budget language — knowledge she continues to use in ongoing local advocacy.

But there was also a step back. Multiple organizations received ARPA funding that increased their capacity to support their community. We saw what it was like when people had guaranteed income, rental assistance, and some medical debt relief. That resulted in stability for people during a very precarious time — but the funding was temporary. We all got this taste of what’s possible when we invest in social good. Then it just stopped.

What, if anything, has endured from the ARPA experience?

Regardless of today’s equity evisceration, people have changed on a molecular level. The confidence community groups have gained for advocacy is sticking. When they’re told no, they now know the right questions to ask — and to keep asking. 

Across the country, some places haven’t stopped. Chicago, for example, did a detailed sustainability analysis of  its ARPA investments, looking at how successful they were and what communities they were supporting. The city is now examining how to preserve these incredible things that happened and keep them going. And they’re doing it all through an equity lens.